Skip to main content

tv   The Call  CNBC  August 25, 2009 11:00am-12:00pm EDT

11:00 am
welcome back to "squawk on the street. "sometimes teases don't give the answer, but we do know that man i twak is being boosted out of the s&p 500. but what you didn't know is it's being replaced maybe by care fusion, cfn, on a when-issued bases which is being spun off from cargill house. so manitowoc goes bye-bye after the close on august 31st, an $830 million market cap. the smallest of the 500 stocks. kimco real estate tradings lower, cut from hold to buy at benchmark. it is a retail rate. we have seen strength in retail, but not this mall loaner. seema seemans, the industrial conglomerate. buy it now at the $75 billion market cap. guys, back to you. >> all right, thank you, matt nesto. and thank you very much for watching "squawk on the street." the dow is up 56, the nasdaq 9
11:01 am
and a quarter, not a bad day, great consumer confidence numbers. things are looking up. >> we have a great show coming up for you on "street signs," including a 21-year-old real estate mogul. yes, we will explain. thanks so much for watching. it is time for "the call." >> this is cnbc.com news now. >> consumer confidence jumps this month, rose to 54.1 from a revised 47.4 in july. home prices rose 4.5% in june, the second consecutive monthly increase, but prices fell .7% in the second quarter from the first. sugar contain up after the restaurant operators beat earnings estimates. of i'm courtney reagan. welcome to "the call of." i'm melissa francis. trish regan is off. stocks are higher, fueled by another term for ben bernanke
11:02 am
and good news on the housing front and consumer confidence. larry. >> hi, everybody, i'm larry kudlow. now that bernanke is here to stay for a while, we'll discuss what it means for the economy, and the stock market going forward. >> and i'm mandy drury. in our "call of the wild" can the s.e.c. institute tighten regulations on the stock market, as one is calling for? this is "the call" on cnbc. >> a lot of positive news for investors to digest today. first up, president obama renominated ben bernanke as fed chief. home prices posted their first quarterly increase in three years, and consumer confidence rose in august. more on that one later. right now, though, the going above 9 600 for the first time since october. the s&p 500 is sitting at 1031 with a gain of just over half a percent. the nasdaq is also moving higher
11:03 am
by about the same quantum at 2028. now, we do have john powell at the white house on the bernanke renomination, and with market reaction, bob pisani, and rebecca jarvis at the nasdaq. we have it all covered. let's start with john howard. john. >> mandy, president obama is looking for a soothing reaction from the financial markets today, but when he announced the renomination of ben bernanke to another four-year term, he made clear that he doesn't regard this appointment as the end of the financial recovery effort. >> we are a long way away from completely healthy financial systems and a full economic recovery. and i will not let up until those americans who are looking for jobs can find them, until qualified businesses, large and small, who need capital to grow, can find loans at a rate they can afford. and until all responsible mortgage holders can stay in their homes. that's why we need ben bernanke to continue the work he's doing.
11:04 am
>> now, ben bernanke also expressed a nod toward political pressures he's facing. he said he was going to pay attention to price stability going forward. he also made clear that he was trying to respond and reassure those critics in both parties who are worried about the fed's independence. >> i would like to express my gratitude to president obama for the confidence he has shown in me with this nomination, and for his unwavering support for a strong and independent federal reserve. >> now, of course, the acid test for that independence may be when the fed decides it's time to tighten when the obama administration is still looking for growth and economic recovery. of steve liesman pointed out this morning, but now we'll get the immediate reaction from bob pisani. bob. >> thanks very much, john. the important thing here, mr. bernanke helps, but it was the economic news on kay shiller, as well, and the consumer confidence numbers. take a look at the s&p intraday here, a little discussion that that conference board number may have been leaked a little bit before. the conference board said they
11:05 am
put up the number at the same time on their website for everyone 10:00 eastern time, but they did move up, the numbers -- or the s&p certainly moved up ahead of the numbers at 10:00 eastern time. take a look at the home builders. case-shiller, 1.4% increase month over month. that was the second month in a row we saw an increase in prices. all of the home builders are up nicely here today, many sitting at month highs. the big debate is whether financials in commodities will continue to dominate. there is financial stocks in the last month or so on the top line. dominating the s&p 500. commodity stocks also dominating, as well. a lot of people are trying to argue now, that more defensive names like consumer stocks ought to do a little bit better in this environment, because many people have to be broadly invested at this point. here is the trader dilemma, quickly. many traders are bearish, but they're in fact set up for long positions right now. shortages down, the hedge fund survey from goldman sachs indicated traders were bullish over all. tradertalk.cnbc.com for more.
11:06 am
rebecca, how are we looking at the nasdaq? >> hey, bob, we're looking good at the nasdaq. we did see a bit of an uptick on the consumer confidence data. one stock in major confidence, yahoo flirting with flat line right now. a couple things on this name. first off, they're buying mach 2,.com, 16 million users, a big for ray into the arab world, but trying to compete with google and trying to roll out more search, more instant messaging and more online communities to be in line with what google is doing right. meantime, google shares to the up side by a percent, getting an upgrade today. essentially, think equity. once the economy comes back, they're going to come back with it. on top of that, apple shares in the up side by 7/10 of a percent. it looks like there is a bit of a potential power struggle forming over at apple with steve jobs back in the office, he's working on the new tablet device, and the story in the "wall street journal" says maybe he's getting a little too involved. at least that's what some
11:07 am
reports are saying, but he sent an e-mail to the "wall street journal" saying not the case. that's not what is happening. and meantime over in corin than college, looks good, even in a down environment, managed to get sales up 29%. also, new students enrolling there, for-profit education has been a big place on fire. it's up 10%. phil lebeau has more for us and breaking news on cars. hey, phil. >> we do, rebecca. the cash for clunkers program, the deadline for dealers to file paperwork at the federal government has been extended once again. remember, it was originally supposed to end at 8:00 last night. government said listen, we'll extend it until noon for the dealers to file paperwork. now they're saying until 8:00 tonight. because there's so many dealers trying to get paperwork in on the cash for clunkers deal. medical list, that's the latest on the program. we're still waiting for the final number in terms of how many sales, as well as how much of the $3 billion the government set aside will be used up for cash for clunkers.
11:08 am
>> and i'm still waiting for cash for fall handbags and purses. >> cash for clunkers, refrigerators, appliances, washing machines. >> handbags and shoes. i can't wait. it's going to be great. >> i just want to check for the news. >> let's talk more about ben bernanke and his renomination. what does it mean for the economy going forward? let's bring in dean baker, direct tour for economy research and bill cox at breaking views.com. and on the phone from a secret, undisclosed location, hiding from his fans, senior economic reporter, steve liesman. guys, thanks so much for joining us. rob, let me ask you, does this mean that he's got a little ben bernanke has a little bit more freedom to maybe oppose obama? >> i'm not sure he has freedom to oppose obama, but he is going to have to show us that the precrisis ben bernanke doesn't come back. i kind of see it as two bernankes, one where he department with the crisis successfully. arguably, that's where the president has renominated him. but i think the pre-crisis bernanke was a bit of of a
11:09 am
failure. now it's his opportunity to show us that he can help stop speculative bubbles. and he is going to have to make some decisions like raising rates, perhaps, before the political environment is ready for it. >> exactly. i mean, dean, doesn't he isn't that what it comes down to is that possibly he could step on the brakes a little bit sooner than maybe the president and the administration want him to, because he's already back in office. >> i don't know if i'm worried iffy going to step on the breaks -- i'm not worried, i'm hoping. >> i think it's an understatement. i think you have the case where the captain of the titanic arguing he should get another command based on how effective he was in getting people into the life boats. ben bernanke got us into this mess in a big way, he's not as responsible as allen greenspan. >> no, he made the same intellectual mistakes that greenspan made. i agree with that. but obviously the president decided that we are in the middle of a battle that we seem to be winning for the most part.
11:10 am
with you don't want to change the general. but i do agree -- i mean, so i would qualify the support that one has for ben bernanke. but i think it would have been a mistake, actually, to remove him at the moment. >> but steve liesman, let me bring you in, old friend, wherever your undisclosed location is. i don't see wild cheering in the markets. gold is up 5 bucks today, i guess the dollar is mixed. is bernanke the right guy for an exit strategy that will keep price stability and growth? are we confident about that? >> well, let me first tell you, larry, where i am, population 840, altitude about 5400 feet. that's as much as i'm going to tell you. >> okay. >> and, you know, i think you raise a good question. i would point you to the remarks he made today, and where he ended up. he wants to work alongside congress and the administration to get back to growth, and his final words, larry, were price stability. what does that say? he wants to work alongside with
11:11 am
them, he thinks keeping policy accommodated for a period of time, and then getting back to the things the fed used to do and used to only do, which is maximum employment and low inflation. and that's where he wants to go. i think he is committed to that, and i would argue very strongly with dean baker saying that bernanke is the one who got us here. let's not forget, it was bankers making silly loans, and people taking those loans that was fundamentally behind the crisis, whatever the faults were of the fed and -- >> and you don't think money got us there, steve. it's not loose money that made it possible for people to buy houses they couldn't afford? >> the housing bubble could have counteracted that. i absolutely do believe it. because i saw the housing bubble, i'm not that much smarter than them, and i could have told them how to counteract it. >> that's the thing, dean. let me stay with that. i think this is an open debate. look, i think bernanke gets credit for the last six to nine
11:12 am
months. he gets a lot of credit. you, however, get a lot of credit for the bubble. and we don't know exactly what bernanke's exit strategy game plan is going to be, so we avoid a third bubble. we had a tech bubble, housing bubble. inside housing bubble we had the energy commodity oil bubble. things were devastating to the economy, dean. the question is, do you think that the market plays that experts really trust bernanke with this? he was the right guy to solve the anti depression. but is he the right guy now to exit us out of this mess we're in? >> i don't think it's clear who the right person is. realistically, is there another person out there you could say we could bring in and we would have more confidence that person would make the right call to bernanke? i can't say that. so, you know, in terms of what obama's choices were, i think he made a reasonable choice that way. as i say, it's just kind of painful for me to see someone who did make some very, very big mistakes, walk away, and get -- you know, get reappointed for a second term. i should also point out, there
11:13 am
are regulatory issues. you know, i'm uncomfortable with. you have goldman sachs that goes from being an investment bank to being a bank holding company. and it's still acting as an investment bank. fine if you want to go speculate, but don't do it with the safety net of the fed and is the fdic. so i think there are some real problems with bernanke's conduct, even in the last nine months. >> i think that's a very good point. beyond bernanke, there is a question about how much commitment there is by administration into actually root and branch perform with the financial regulatory system. and that's a critical question, whether bernanke is there or not. >> all right. we've got to leave it there, guys. thanks so much for joining us. i'm sorry, steve, we've got to run to commercial. thanks so much to all of you guys for joining us. mandy. >> that's the economic news. coming up next, the market's view of bernanke's reappointment and how you should be positioned for his second term. >> and wall street trading practices under fire. we'll tell you which ones regulators want banned. that's ahead in today's "call of the wild."
11:14 am
but did you know you also get hotel price assurance? it's a one-two punch of savings -- pow! pow! lower hotel booking fees mean you get a lower total price. plus, if another orbitz customer then books the same hotel for less, we send you a check for the difference, automatically.
11:15 am
11:16 am
okay, crude oil touched 75 and couldn't hang on. that is critical territory for crude oil. didn't break through. fell again. right now is down about 7/so 10% of a percent. >> how are markets reacting to bernanke's reappointment. let's ask the president and portfolio manager of permanent portfolio sons and allen valdez. gentlemen, thank you very much for joining us. michael, let me get to you, first of all, because it's really interesting. i was talking with some people about the reappointment this morning on "squawk box," and
11:17 am
they were saying the bigger question here is what would happen to the markets if he was not reappointed? which essentially would have been a complete no confidence vote in the measures he has taken. >> yeah, mandy. that's a great point. i think the appointment -- the reason we have seen muted market reaction, i think, is that, you know, basically there are some questions, as your previous guest alluded to with ben bernanke. but the reality is, most market participants wanted him reappointed. he's the devil you know, so to speak, with respect to current policy. and his policies of easier money, getting us out of this recession, seeing us through the last six to nine months, have been widely accepted by the market. so i think it's an uncertainty that's been removed from the markets. and as you know, markets do not like uncertainty. so i think it's probably a positive. >> they certainly do hate uncertainty. allen, do you agree with michael that it's better to know with regard to the market here? >> no question michael is right. this market probably would have opened up 1,000 points if the chairman wasn't relegislated.
11:18 am
we do have good news out of case-shiller and consumer confidence, but bernanke at the helm is a good sign for the markets. we like it. and not only uds markets, but world markets also agree with this election. >> it's too easy to say that. can i be a little bit of a dissender and challenge you? all of in this incredible complacency. we knew about this. 80% in trade, 80% invest tore polls. the question is, michael kajeno, and you are dodging the question, so i have to ask you, is bernanke going to be helicopter ben, or is he going to be king dollar price stability ben? that's the question. i want you to make a bet. because the stock portfolio matters. >> i have concerns in the long term about the exit strategy. and his fundamental view toward monetary policy. i agree with you on that. the future is going to tell us where we go on that. i think for the moment, the market views it positively. as you know, i'm more of a tighter monetary guy, larry. and so i do have questions with respect to the long-term.
11:19 am
i've seen them articulate an exit strategy. but we have not seen it happen yet. and i think that's a very valid concern, although i would say this would be true, regardless of who the ultimate fed chairman would be. >> well, i agree. but i just hate this puppy dog lapping going on, lap, lap, lap. allen valdez, i want to know, are you going out to buy gold today, commodity and energy stocks today, or are you going out to buy foreign currencies in nominated stocks? in other words, in your heart of hearts, put aside all this dog-lapping, puppy-lapping, are you confident that bernanke can pilot us without another inflation bubble? >> no, we probably have to see inflation. we went to $2 trillion on the balance books in a little over a year. you're going to have inflation somewhere down the road. but you put the fire out in your house first and then worry about water damage. if you look back to where we were last year at this time, the markets have come a long way,
11:20 am
confidence has come along way. of and no one knows what is going to happen with inflation. we know it has to go up, but here is a guy that is an expert on depression, i think he'll have the correct exit strategy. >> fighting depression -- let me just say this. fighting depression is one side of the coin. this is the other side of the coin, fighting the bubble. and that's why we've got to figure out here -- we've got to figure out, is he going to be helicopter ben, or is he going to be king dollar ben? that's the biggest question here, because it matters what sectors in the stock market to invest in. cajeno, i want you to weigh in. are you buying king dollar ben or helicopter ben on the news of his reup? >> well, as you know, i like gold, larry, for the long term. inflation is not a problem right now, but it will be in the future, no question. and the exit strategy is going to determine how much of a problem that is. i like commodities. i think the global growth strategy as an inflation play and financial services, because i expect the easy money policy
11:21 am
to continue, which results in a great yield curve for financial services and banks to earn money. so i am playing what the market is giving me and what the fed is giving me at this point. >> allen, i want you to weigh in on this, because obviously how the exit strategy is conducted is very important. and one thing that certainly seems to be coming no people's minds is we need a coordinated exit strategy here, can't have the u.s. unilaterally -- can't have the ebc acting unilaterally. it has to be a coordinated response. because if the u.s. lags, the boj and ecb, it's going to be a huge threat to the value of the dollar. do you agree? >> no question about it. but i think the dollar -- i don't see the dollar crash, and i think we'll stablize here. i think in the long run -- >> you think the dollar is going to stabilize? can you defend that? let me challenge you. that's an amazing statement you made. why? why is the dollar going to stabilize? >> i think you're going to see more growth in the united states and things will turn around in the long run and the dollar, just the fact that it is the dollar, the world currency, will stabilize here.
11:22 am
>> the world currency. doesn't mean it has to stabilize. it may not be the world currency in ten years. that's one of the bernanke issues, allen. >> i imagine it's going to be the world currency. i really do. >> but doesn't mean it can't be sold. >> that's true. but i think we're -- i think it's going to range here. i don't see it going down much and i don't see it going up much. >> we've got to get out. mike and allen thanks a million. i just put some challenges into that conventional wisdom. coming up next, rising home prices across the nation. that's right. rising home prices. is this the sign we've been waiting for? is the housing recovery upon us? we'll discuss this joyful story. >> and consumer confidence also on the rise. will consumer spending follow suit? we'll discuss the road to recovery coming up right here on "the call." we'll be right back.
11:23 am
11:24 am
11:25 am
welcome back to "the call." let's look at how the markets are doing. positive is the sign today, despite we saw a negative lead from europe and asia, but really positive emphasis from our home-dproen situation here. of course, better than expected data on consumer confidence and we'll talk more with that in a second and good data on the home front price, as well. which you guys are telling us
11:26 am
about. >> yes, home prices posted their first quarterly increase in three years. the case-shiller index rising nearly 3% from the previous quarter, rising month over month. and we went back and looked at the data. diana olick is here from washington with more details. >> melissa, dare we say frost in home prices? not quite yet. but two new quarterly reports, one government index that measures fannie and freddie loans and the case-shiller. first let's go to the fhsa, prices fell 0.7% in the second quarter from the quarter before, down 6.1% year over year. but the rates of depreciation are slowing, and we are seeing gains month-to-month. now to the big news. the quarterly case-shiller price home index. i'll show you the nationalin deblgs which mirrors the top 10 and 20 markets. for the first time in three years, we are seeing a positive
11:27 am
2.93% quarter to quarter. of index is down 4.9% year over year, but even the index's inventor is cautious. >> i didn't say we reached a bottom. i said this is very suggestive of a major turning point. but we have seen other corrections like this that -- notably, a year ago in early 2008, we saw the rate of decline of home prices suddenly get much, much smaller. and it looked good, but then it collapsed again. >> okay. so why is shiller not feeling frothy about his own positive index? well, a couple of reasons. number one, it is not seasonal hee adjusted, and historically, we always see home prices go up in the spring. second, it does not take into effect the $8,000 home buyer tax credit, which gave a whole lot of people, 1/3 of all home buyers, more buying power. and finally, it does not take into effect the brief slow down in foreclosures, thanks to bank moratoria, and the banks holding on to foreclosed properties,
11:28 am
because they were trying to figure out the obama mod plan. so that's why he's not feeling too frothy. larry? >> all right, diana. so the question is, has housing turned the quarter? and case-shiller may be behind today's rally in stocks. here to discuss, howard glazer a former hud advisor during the clinton administration, and susan walkter, president of real estate and finance at the wharton business school at the university of pennsylvania. susan walkter, this is a very surprisingly strong report, and 15 or so of the metropolitan areas showed monthly price gains. there are seasonally adjusted data here. what do you make of it? >> i think it's good news. look, we're not off to the races, but this is a turn. of course we can go down next month, of course unemployment can go up. but this is signs of a bottom for me. >> yeah, howard, looking back at the numbers, so month over month, prices are up 1.4%, i went back and looked at june versus may for '08. it was down half a percentage point, not up. if you look at june versus may for '07, that was also down.
11:29 am
so kind of no matter how you turn this cube, i know year over year, prices have obviously declined a lot. but it's up this month, and it isn't usually up in this month. that's a positive. >> we're gaining ground. and that's with more sales. that's good news. and this is june. and now we've had two more months of good, solid overall growth. so two months from now, we should see even better prices. >> you know, howard, when you look at some of the states here, this is not from case-shiller, but in florida, howard, home sales increased in july for the 11th straight month. that's in florida. in california, home sales are the highest since 2006. 13 consecutive monthly gains. now, my question to you is, will rising home sales be a leading indicator of stable to rising prices? because that's sort of what case-shiller is suggesting. >> right. el with, i think, you know, what i would say is, we haven't actually turned the corner as a leading indicator, but we're in the neighborhood, and we're loitering around the corner. the question now is,
11:30 am
sustainability. and will borrowers and home buyers stay in the game? we have first time home buyers that are driving a lot of this, and they're largely in there, not just because of affordability, but also because of the first time home buyer tax credit. and so i think some focus is now going to shift to washington. what will washington do to make sure that we are turning that corner and not just stuck there for the time being. of. >> and suze, a lot of people think the economy can't move forward until home prices stabilize. but even if they stablize, you know, the damage is done. there are a lot of people that are under water with the mortgages they have right now. where do you go from there? >> we're not going to see a let up from foreclosures. that's the other side. the foreclosure problem is a problem of levels, not rate of growth and we're so far off our highs we still will see equal numbers. >> the thing about foreclosures, i think as a systemic factor, as difficult as foreclosures are, they are receding as a systemic factor. in other words, we're beginning to factor in an influx in inventory and the system is
11:31 am
showing perhaps the signing that it can deal with an influx of inventory as we get new buyers into the system. >> i agree. >> that's a great point. it looks like from some of the other data and anecdotes about foreclosure auctions, people are coming in -- now they can get some mortgage money, and they are scooping up the foreclosures at very cheap prices. is that what you're describing? >> well, innings we're seeing some of that, but also the concern about foreclosures was that the amount of inventory would continue to drive home prices down, and so people would stay out of the market because they were concerned if they bought a home today, it would be worth far less tomorrow. >> but has that stopped? is that downward spiral process stopped? is that what you're seeing? is. >> exactly. that's exactly what i'm saying, is that even with a relatively steady stream of foreclosure, and we still have 1.5 million or more perhaps in the next year -- >> susan, i'm sorry, i'm flat out of time. susan, this is such an important point howard is making. do you think this downward spiral of prices, inventories, prices, inventories, is it, in
11:32 am
fact, stopping, in your judgment? >> keep your eye on the inventory. it looks like it is slowing down on a national level. >> that's a great point. thanks for joining us. >> coming up, creating an unfair playing field. we'll discuss which ones regulators are watching and whether they should be outlawed. >> but first up, will the bounce in consumer confidence get americans spending their way toward economic recovery? one can only hope. but that's up next, right here on "the call." why ford? why now?"
11:33 am
you know what i do? i introduce them to the most fuel-efficient midsize sedans... ...and suvs in america. i don't know if you've heard, but this fuel efficiency thing.. kind of a big deal. anyway, ford and lincoln mercury have you covered... with showrooms full of fuel-efficient cars, trucks, suvs, crossovers, and hybrids. how's that for going green? now, get 0% financing plus up to $1,500 cash back on most ford, lincoln and mercury vehicles. go to ford.com, or visit your ford or lincoln mercury dealer.
11:34 am
11:35 am
welcome back to "the call," i'm hampton pearson in washington with new budget deficit estimates out from the congressional budget office. the nonpartisan cbo now says that ten-year budget deficits looks like $7.14 trillion from 2010 to 2019, a $2.7 trillion increase. $1.59 trillion is the current fy budget deficit, 11.2% of gdp, the highest since world war ii, 1.38 trillion. meanwhile, the obama white house agrees with the cbo on the current fiscal year budget deficit, and the office of management and budge he is also raising its ten-year budget deficit estimates. the obama projections look like 9.5 trillion from 2010 through 2019. $1.5 trillion in 2010.
11:36 am
$1.12 trillion in 2011. that translates into 10.4% of gdp. handicapping the economy. the administration is looking at unemployment averaging about 9.3% this year. peaking at 10% along the way. unemployment next year, 9.8%, the recession ending in the second quarter of this year, seeing a negative gdp of 2.9% in '09 and a positive 2% in 2010. now, you saw this cbo ten-year deficit figure was roughly $2 trillion lower than the administration. that's because the cbo uses its -- as it's baseline the assumption that current laws don't get changed. well, among other things, the bush tax cuts are due to expire. that would trigger a dramatic increase in revenues. but the $2 trillion deficits from both put some of the administration programs, especially the $1 trillion
11:37 am
overhaul of health care very much in jeopardy. mandy? >> thanks for keeping us updated there, half ton. consumer confidence rising in august, and the conference world saying index rose to 54 there 47 in july. so is the consumer on his or her way back? let's ask michelle, senior economist and jan, thanks so much for joining us today. michelle, this was, of course, a consumer confidence number. this is the sentiment that seems to be getting better. the question is, will this translate into real spending? >> well, of course, that's the question. now, i have to say, we have never expected that the consumer would be the sector that would lead us out of the recession. we didn't expect that the consumer would play a big -- a big role in the economy as it -- in the early stages of recovery. so i think you're right. while this is good news that consumers are getting more optimistic about particularly the outlook for the economy, i
11:38 am
don't think that you can garner a lot in terms of what it means for consumer spending. we still think consumer spending is going to be pretty sultry over the second half of the year. >> we were speaking on "squawk" with the ceo of staples, and they couldn't get end of year forecast, because it was blurry. go ahead. >> you really need to see better numbers, i think, on the employment front. that's what we're all waiting for. until consumers have the wherewithal to spend, i think the outlook is going to continue to be uncertain. >> jan, does the stock market ral low since early march have created -- i don't know, $3.5 trillion of wealth. we lost $15 trillion. does that help at all, jan or am i just whistling past the graveyard? >> it helps a lot at the upper end. your sales probably follow the stock. for these guys at the lower end, the walmarts, targets, even macy's, kohls, pennies of the world, you ask the consumer,
11:39 am
will you get a job, can you get a new one if you lose your job? if the answer is no to any of those, it's a problem. >> does the 90% employed -- i'm rounding here. does the 90% employed offset the roughly 10% unemployed, jan? >> like i i say, i think it depends on whether you're keeping your job. i'm optimistic the consumer comes back at the end of the year. inventories have never been center. but my real concern is, do they have worries about their job status. >> i'm wondering, michelle, also whether or not we're getting a full sense of how strong the consumer is right now because of the temporary programs like cash for clunkers and tax credit for buying homes. >> you're right. there is no question we're seeing some activity perhaps being pulled forward. i mean, some of the sales would have taken place anyway, we believe, in terms of autos and what the impact from the cash for clunkers is. it's not solely driven. we also find there's a lot of people that head into the showroom, thinking their car qualifies as a clunker and find out when it doesn't, we still hear reports that they still
11:40 am
buy. but there is no question, like, for example, with auto sales, we do expect we'll see a dip in september once the program has run its course. as i said, we really don't expect the consumer to gain momentum until we get into the first half of 2010. >> michelle, that raises an interesting point. you mentioned a few moments ago the consumer will not lead of us out of recovery. of so i was going to ask you the question, who will? >> well, it's really the inventory story that everybody is talking about. you know, it wasn't supposed to happen. we keep talking about this, an inventory cycle in this day and age. but, in fact, that's what we saw. we had a big, you know, build-up, unwanted build-up in inventories that had to be worked off. that was what really weighed on the manufacturing sector. we have seen firms making progress, they set inventories, and now at a point where the inventories will be drawn down more slowly, and statistically, that will give a big boost to gdp, in the third and also the fourth quarter for this year. >> by the way, just check it out before we lose it. the retail index which is done
11:41 am
fabulously since early march and the summer is up about 2% today. i've got to believe that has to do with stabilizing case-shiller, housing and housi housing-related wealth. but retail index, we talked about this. retail index is saying, guess what? consumer is not dead. >> absolutely. and we need to know how to make money from the back of the consumer. and i hear you have likes and dislikes. >> i like walmart because they're doing a great job out there and the lower-end consumer is coming back with them. i think the consumer will stay with them. it's going to be them against target, and i think walmart is winning that game. i really like macy's, because i think the my macy program is working. and i think that they can take that $400 million they're saving in expense and translate it into sales with the consumer. and i also like stage stores, which is a small growth retailer. so those are retailers that i think can benefit from changes in their business. walmart being the one that's the most interesting, since it can retain a consumer that probably
11:42 am
wasn't shopping with walmart a year ago. >> great. of jan and michelle, thanks so much for joining us. >> up next, trading practices under attack for damaging investor confidence. flash orders to dark pools, should they be banned? >> we'll debate. should we regulate wall street in today's "call of the wild. of" with my new netbook from at&t. with its built-in 3g network, it's fast and small, so it goes places other laptops can't. i'm bill kurtis, and wherever i go, i've got plenty of room for the internet. and the nation's fastest 3g network. gun it, mick. (announcer) sign up today and get a netbook for $199.99 after mail-in rebate. with built-in access to the nation's fastest 3g network. only from at&t. why is dick butkus here? i hired him to speak. a lot of fortune 500 companies use him. but-- i'm your only employee. we're gonna start using fedex to ship globally--
11:43 am
that means billions of potential customers. we're gonna be huge. good morning! you know business is a lot like football... i just don't understand... i'm sorry dick butkus. (announcer) we understand. you want to grow internationally. fedex express [ engine powers down ] gentlemen, you booked your hotels on orbitz. well, the price went down, so you're all getting a check thanks. for the difference. except for you -- you didn't book with orbitz, so you're not getting a check. well, i think we've all learned a valuable lesson today. good day, gentlemen. thanks a lot. thank you. introducing hotel price assurance, where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically.
11:44 am
11:45 am
the push to regulate wall street is back. democratic senator ted kaufman leading the charge against high-frequency trading. he spoke to cnbc earlier today. i think we have that sound bite for you. >> ah. there we go. >> we have to be transparent, we have to have a market that's fair and credible, and the idea that some people get to see the bid -- its like a poker game where somebody gets to see the cards before other people get to see the cards. that cannot last, and i think we have to change that. >> okay. high-frequency trading. let's see -- well, let's bring in -- let's see, we have democratic senator ted -- sorry. >> no. we have mr. bloom blumenthal and
11:46 am
also al green aldridge. forgive us, now that we are organized again. we talk about banning all of these things on wall street as we get more and more frightened about what's going on in the black pools, the high-frequency trading. the thing about it, it creates liquidity, right? irene? >> o absolutely. i think the major problem that we have had so far is that there is a debate, it has been focusing on cell size algorithms, and these al goriths have been in business for 10 to 15 years. like most of wall street, wall street is on the buy side and sell side. the sell side is focused on executi execution, versus buy side is investment management. and so far, most of the discussion as such, really -- sell side algorithms that have been published and publicly available on the internet, all of the documentation for 10 to 15 years, and the fact that we're talking about this, and this is a surprise to the people like the s.e.c. is actually
11:47 am
surprising itself. but my point is, there are so many other things going on, and the government definitely has to understand what's happening out there. >> all right. let me hear from dick blument l blumenthal. on this computerized fast trading business, dick, if it's traerpt and there is no front running, what's wrong with it? >> well, there may not be anything wrong with it, as long as it is fair, and as you said, fully transparent and disclosed. but the fact is, these algorithms have not been publicly available. in fact, sergei alnicof is being prosecuted right now for supposedly stealing this supposed proprietary trade secret from goldman sachs. and the claim was made in federal court, in fact, that this information was so secret, and so significant, that it could be used for stock manipulation. and therefore, justified his being held without bond, where he is now. so these algorithms are secret,
11:48 am
they are used for the flash orders, which, by the way, constitutes, according to recent reports, 60% of the equity volume. 60% of the equity volume. >> but irene is gasping in horror, irene, why? >> first of all, 60% of volume is due not just to flash rating. flash rating compromises a very small proportion of the trades. and it's true it has given high-frequency trading a bad name. but he was not prosecuted just on sell-side al gorithmalgorith. these algorithms that worry talking about that everybody is having a huge fit over, they are published. and i can send the links to anyone. they are in my box. but they are just 1/10 of all of the algorithms that are out there. >> let me come back to the key question, which larry raised. i can it is the key question. what's wrong with it as long as it's fully disclosed? well, if a flash order gives someone a peek at the hand, as senator kaufmann said, it's a poker happened or the cards that the other side has, 30
11:49 am
milliseconds before everyone else in the world has it, and there is profit to the party who is using that information, it's an unlevel playing field, and it undermines trust and confidence in the entire system. so flash orders, high-frequency trading, dark pools, liquidity rebates, all of these practices and mechanisms may be okay, as long as the practice is fully disclosed, and -- >> well, dark holes by definition are not fully disclosed. we're mixing apples and oranges a little bit in this discussion here. but dark pools is a way of trading without people seeing what you're doing and seeing who you are. that's oversimilarly fighting it a little bit. but that flies in the face of any sort of transparency. >> there are different issues, as you mentioned, mixed up. flash orders is an issue where people actually get to pay and see the orders before they're available to everybody else. and in all fairness, this is nothing new. this has been on the new york
11:50 am
stock exchange -- >> but isn't that bad, irene? let me just ask you. of that is what dick blumenthal is saying, the peek at a hand. >> that's true. >> isn't that wrong? shouldn't that be reformed? >> and you know, i can agree with it. i don't have a problem with banning flash orders. you know, if somebody has an issue -- like, i think the s.e.c. has to look into it, and i think it's a fair point. but the rest of the stuff, like people are rallying -- senator kaufmann is rallying against co locations. co location is a ridiculously simple business that anybody can go into. all do you is rent an office to exchange and now under mayor bloomberg, you can rent an office for $200. if you don't have $200 a month, then get several people together. put ten computers in. very simple. >> thank you very much for joining us. >> at the top of the hour, bill aggressiveth, what's in store? >> mandy, we'll talk more about the repayment of ben bernanke and the fallout. what is larry summers going to
11:51 am
do for a job now? we're just wondering about that. coming up. also, have you heard the estimates? as many as 50% of the u.s. population could be affected by the swine flu. this coming flu season. really? is that an overestimate? you think? what would business -- the impact be there? we'll talk about both sides of that issue. and on our watch, the latest treasury auction. here it comes, $47 billion two-year notes. could move the market. santelli is in the house when we see you at the top of the hour for "power lunch." >> a quick break, and then matt nesto on stocks to watch throughout the trading day. >> you know the old story, viewer discretion is advised? we're going to say viewer discretionary is advised, because discretionary stocks have suddenly come on fire, they're being led by the retailers. we'll take a look at a couple those, and as they say at fenway park, you're out of there. i'm going to talk about some of the stocks getting booted out of the s&p, and who might be following them. we'll be right pack, after this. some people buy a car based on the deal they get.
11:52 am
others by the car of their dreams. during the lexus golden opportunity sales event, you can do both. special lease offers now available on the 2009 es 350. special lease offers now available reading about washington these days... i gotta ask, what's in it for me? i'm not looking for a bailout, just a good paying job. that's why i like this clean energy idea. now that works for our whole family. for the kids, a better environment. for my wife, who commutes, no more gettin' jerked around on gas prices... and for me, well, it wouldn't be so bad if this breadwinner brought home a little more bread. repower america. i hope our senators are listening.
11:53 am
11:54 am
it is time now for our call to action, the stocks you need to watch for the rest of the trading day. cnbc's matt nesto is on the
11:55 am
case. >> i said viewer discretion, mandy. if you look at the discretionary group today, lots of things working, up 1.7%, far and away outpace the market and beating financials. that's today, sort of this week sort of story. but if you step back to a month or so, all about financials. but for this report, we're going to take a look at some of those discretionary names, particularly some of the best performers in the s&p 500 today. you can't not enjoy a big 8% move in big lots. check it out. up almost 2 bucks a share here today. that stock is up 78% on a year-to-date basis. they beat, they guided, they divided as all looking positive here today, the company's lower expenses, lower payroll, lower advertising is giving that leveraged operating leverage that analysts have been looking for, where a little bit goes a long way. if you take a look at harmon, harmon benefitting from an upgrade. they came out with a smaller than expected loss about a week ago, but jpmorgan out today waiting it overweight, saying harmon will go to $44, in their
11:56 am
opinion and see top-line potential. by point of reference if you looking at the morgan stanley retail index today, 33 of 35 members are trading higher up about 2.5%, almost a four-fold beat versus the s&p 500 today. and if you take a look at that index from the bottom, up 93%. again, almost double what the s&p 500 has done. just saying, folks. use your discretion. consumer is disz creationnary. and also, the flip side, the staples, man, it doesn't get much colder. after the bell today, high end sell he issial, makes teas, that stock is up 13% at a time when the staples really couldn't be given away. kellogg's, general mills, hershey's, the whole package food group is cold, cold, cold, but you can see high end out today. of there is one month out on kellogg. and lastly, draw to your attention the worst performer, some kind of a farewell party,
11:57 am
huh, for manitowok being thrown out of the s&p 500 overnight. the smallest market cap at about 830 million at last check. but is it going to be replaced by care fusion, cfn, which is trading on a when-issued basis. of it's being spun off by cardinal. >> yeah. okay. i would love to watch -- >> out of time. >> put that back up again. >> did i see the "new york times?" . that's up there. no, that's a question mark. and here is my methodology, larry. i'll show my work. these are the smallest five in terms of market cap and cheapest in terms of share price. those are the ones in the s&p 500 right now. okay. thanks for that. up next, last call on ben bernanke's visit to martha's vineyard. tdd#: 1-800-345-2550
11:58 am
tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab tdd#: 1-800-345-2550 or visit schwab.com/trader today. tdd#: 1-800-345-2550 'course a trade doesn't always work out my way. tdd#: 1-800-345-2550 but when it does... tdd#: 1-800-345-2550 ...man... do i love that feeling.
11:59 am
left
right

175 Views

disc Borrow a DVD of this show
info Stream Only

Uploaded by TV Archive on